Q Please update me on the future of my shares of Sprint Nextel Corp. — BK, via the Internet.

A The nation's third-largest wireless carrier has introduced the Palm Pre smart phone to battle the iPhone, launched a new "green" phone and is increasing its investment in the prepaid wireless business.

The problem is that it lost 257,000 wireless subscribers in the second quarter, including many with the annual contracts that provide it with the most income. For the same period, AT&T Inc. gained 1.37 million wireless subscribers and Verizon Communications added 1.1 million.

Shares of Sprint Nextel are up 106 percent this year following declines of 86 percent last year and 30 percent in 2007.

The firm lost $384 million in the quarter, compared to its loss of $344 million a year earlier. CEO Dan Hesse, while unhappy about the loss, said the company is curing many of its technical and customer service problems and the pace of its losses is slowing.

It is now selling an "eco-conscious" phone with a casing of biodegradable plastic made partially from corn. Unlike earlier "green" phones that were very basic, the new Samsung Reclaim is a full-featured phone selling for $49.99 for those taking a two-year contract.

Meanwhile, US antitrust regulators have given clearance to the company's $483 million acquisition of Virgin Mobile USA Inc. The Federal Communications Commission must also approve.

That deal would make it the No.2 seller of prepaid cell phone service for those consumers seeking lower cost and no contract. Its own Boost Unlimited prepaid service is also growing. While prepaid service has become popular in the economic downturn, it is less lucrative than regular contracts.

Consensus analyst rating on shares of Sprint Nextel is "hold," according to Thomson Reuters, consisting of four "strong buys", four "buys", 20 "holds" and one "underperform".

The fact that Sprint Nextel is the only one of the big three wireless carriers not affiliated with a major local phone company makes it attractive to cable companies seeking to offer wireless. About one-fifth of Sprint Nextel sales come from its long-distance unit, which provides fixed-line phone and data services.

Earnings are expected to decline 200 percent this year versus the 28 percent drop predicted for the wireless communications industry. The earnings forecast for next year is an 11 percent decline compared with a 99 percent increase projected industry-wide. The five-year annualised growth rate is expected to be two percent versus a seven percent rise forecast for its peers.

Q I am concerned about my shares of AIM Global Health Care Fund. Are they worth my holding them? — PC, via the Internet.

A This fund, which has had Derek Taner as lead manager since 2005, looks to invest in the most undervalued health care stocks doing business around the world.

Taner reduced the number of portfolio holdings from 100 to 70 and has avoided big pharmaceutical firms such as Pfizer and Merck because of the impact expiring patents can have on their businesses.

The $408 million AIM Global Health Care "A" is down 14 percent over the past 12 months and had a three-year annualised decline of one percent. Both results rank at the midpoint of health-related funds.

"I'm not recommending this fund yet, though I'm slowly warming to it because of the changes Taner made," said Ryan Leggio, analyst with Morningstar Inc. in Chicago. "It would suit investors who are worried about the big drug companies because it doesn't own those stocks, but I would otherwise recommend investors look at other health care funds or exchange-traded funds."

Taner, who previously ran Franklin Global Health Care Fund, has added shares of Abbott Labs because it doesn't have major patent expiration issues and its price was right. The portfolio is diversified across health-care sectors, with above-average stake in small and micro-cap firms.

Dean Dillard serves a co-manager, and the fund is assisted by five analysts and members of AIM's International Growth Investment Unit. Neither Taner nor Dillard personally invests in the fund.

"A fund like this is very specialized, and in order to invest in it you must believe health care stocks are undervalued or fairly valued," said Leggio. "It is difficult for average investors to do this kind of investing."

While only one-fifth of the fund's stocks are foreign-based, many companies in which it invests have large overseas sales. Top holdings include Gilead Sciences, Amgen, Roche Holding AG, Thermo Fisher Scientific, Johnson & Johnson, Abbott Laboratories, Medtronic, Life Technologies, AIM Treasurers Series Trust and AIM STIT Liquid Assets.

AIM Global Health Care requires a 5.5 percent "load" (sales charge) and has a minimum initial investment of $1,000. Annual expense ratio is 1.22 percent.

Q When is a bond callable and how does that work? — KH, via the Internet.

A Callable means a bond can be redeemed by its issuer before its maturity.

This is often done due to a decline in interest rates because the company that first issued the bonds is able to refinance its debt at a lower rate.

When a bond is called, the issuer pays investors the call price, which is usually the bond's face value, and the accrued interest to that point. It stops making interest payments. The problem for investors is that they'll likely wind up reinvesting their money in a lower-rate bond.

"When bonds are issued it is stipulated if they are callable or not, and under what parameters they are callable," said Paul Nolte, investment director of Hinsdale Associates in Hinsdale, Ill.

"Some bonds are callable anytime, while others are callable on certain dates."

Investors are taking some risk with callable bonds that their investments won't reach maturity, but higher yield compensates for that concern.

"We do a fair amount with callable bonds," said Nolte," because you do pick up a little bit more yield with them."

Andrew Leckey answers questions only through the column. Address inquiries to Andrew Leckey, 555 N Central Ave., Suite 302, Phoenix, AZ 85004-1248, or by e-mail at andrewinv@aol.com

(C) 2009 TRIBUNE MEDIA SERVICES, INC.